Purchased in February 2003, the Palm Valley sale provided an excellent return to Investcorp’s clients. It has also provided them with cash flow, from rents and leases, over the investment period.
Palm Valley Apartments was part of Investcorp’s Diversified III portfolio and is the second asset divestment following the sale on September 18 of Plaza at DelRay. The sale was prompted by improving market dynamics for residential real estate in Phoenix coupled with high investor interest in the area, resulting in favorable pricing. This is Investcorp’s twelfth property sale in 2004 and brings the Firm’s total real estate realizations this year to over $380 million.
“The attraction of investment in real estate is that it has a low correlation to traditional markets,” said Investcorp’s Chief Operating Officer, Gary Long. “Real estate is also popular with our investors as they obtain a return on their money from two channels: through cash flow generated from rents and leases, and the capital gain from the final sale of the property. Over the past ten years, we have invested $3.3 billion in over 120 transactions, returning $189 million to investors at an internal rate of return of approximately 17%.”
Real estate investment is one of four alternative asset classes in which Investcorp engages. “Our clients realize that it is important to diversify their portfolio and that reducing risk is as important as seeking enhanced returns,” said Mr. Long. “Our range of alternative investments enables them to do this.”
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